It is almost axiomatic that the forklift market is a reliable bellwether for the economy, being the first to slip into recession and the last to emerge from one. The industry is also seen as mature, with new demand only replacing worn-out trucks, and according to one forecast by Oxford Economics it may be 2017 before reaching unit sales of 33,000, a considerable period of 13 years since the pre-recessionary peak of 32,213 recorded in 2004.
BITA’s Autumn 2013 economic forecast for members is upbeat, with orders for counterbalance trucks expected to be up 3.7% on 2012 but with warehouse trucks showing a projected 2.4% fall on the preceding year. In terms of the overall market that gives a total of 27,107 trucks, a 0.7% increase. So what are these new trends which could significantly affect the outlook?
In the bullish corner, Britain’s expanding economy, which seems to be pulling ahead of its European neighbours, should give a fillip to truck sales and one force underpinning this growth is a re-shoring of outsourced manufacturing to Far Eastern countries back to Britain and Europe for a host of reasons, not least soaring labour costs in China. This means it is now cheaper, for example, to produce high-end apparel in Britain rather than China, and it was the drive to exploit very low labour costs in the Far East which powered the outsourcing trend. If this re-shoring, albeit a trickle now, becomes a flood then that can only be a bullish trend for the UK forklift market, further boosted by a possible renaissance in British exports.
Such a re-shoring trend could be boosted more if industry at large realises that a fixation on product cost may be wrong-headed, as Zara, the world’s leading clothing retailer, believes. This company built its empire on the unconventional premise that speed and responsiveness are more important than product cost and so it is renowned for its ability to deliver new clothes to stores quickly and in small batches. More frequent delivery journeys mean more handling tasks and so more demand for forklifts. Another key, successful plus for Zara is that it controls more of its manufacturing than do most retailers. For Zara, its supply chain is its competitive advantage, helped, revealingly, by concentration on a huge centralised warehouse. If this model were adopted more widely by other industries, again that would boost forklift demand.
This centralisation of distribution centres may, however, in the long run restrain demand for new trucks. In Britain there is a trend towards port centric logistics with very large warehouses, some of which will be common user facilities. Such centres will use trucks more productively, providing an initial fillip to sales but also the closure of many smaller warehouses, leaving a question mark over long-term sales. Forklift users also want their trucks to be more productive and in the quest for this the remorseless rise of multi-functional, articulating trucks could prove a bear point for overall truck sales. The operative word is multi-functional. Many businesses still rely on counterbalance trucks, for example, to load/unload lorries in yards for load deposit inside warehouses where other trucks like reach and VNA takeover for racking duties. Articulating trucks can dispense with such double handling and so reduce truck numbers.
Technology advances, too, which make trucks much more productive, could suppress truck demand. Fitted with RDTs, for example, trucks can double cycle with loads always on their forks, thus reducing truck numbers. One must also factor in the growing market for hired, second-hand trucks and sales of refurbished models, which would dampen new sales. The future, therefore, is more difficult to discern but on balancing all the factors the outlook has more positives than negatives.
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